Algorithmic stablecoins
Stablecoins are supposed to be less volatile than regular cryptocurrencies as many issuers say they back up their value by holding onto another asset. Algorithmic stablecoins, by contrast, are designed to maintain their peg (and investor confidence) through mathematical equations and active trading incentives to manage supply and demand. U.S. Treasury Secretary Janet Yellen said in May that stablecoins need a regulatory framework as they pose a risk to financial stability. That was partly in response to the collapse of algorithmic stablecoin TerraUSD.
Any cryptocurrency that arrived after Bitcoin can be referred to as an altcoin. Some crypto enthusiasts consider the term to be insulting because they think it signifies the supremacy of Bitcoin over other currencies.
Crypto investors who believe the original crypto coin is the only one the world will ever need. They’re sticking with the original vision of Bitcoin’s creator, the pseudonymous Satoshi Nakamoto, and dismiss concerns over its volatility and vast energy consumption.
A twist on the word “Bitcoin,” Buttcoin refers to a Reddit forum where people post memes and jokes denigrating crypto. Members of the Buttcoin community take particular pleasure in steep price declines of Bitcoin and other digital currencies.
Software connecting blockchains that can’t otherwise talk to each other. These mechanisms allow users to swap coins from one network into another blockchain’s tokens. In their ideal form, these bridges operate independently of anyone, via lines of code known as smart contracts. However, a spate of recent thefts has exposed weaknesses in their architecture.
This reference to prolonged declines in crypto markets was used for the period from early 2018 to mid-2020 when Bitcoin and rival digital token Ether stagnated. It’s re-emerged in 2022 as Bitcoin slumped by more than 50% from a record.
Imagine a time before banks, when people traded, borrowed and lent directly to each other. That’s the idea behind decentralized finance, or DeFi, whose blockchain-based software enables such interactions. DeFi apps such as MakerDAO, Aave and Compound are attracting billions of dollars from users, many of them hoping to transact anonymously and earn big returns. TradFi is the traditional financial industry that these startups want to replace.
Decentralized exchanges such as Uniswap and dYdX that let users trade coins or crypto derivatives anonymously and without intermediaries like banks.
Decentralized applications (“dapps”) with economic incentives. They generally involve tokens granted as rewards for performing game-related tasks such as winning battles, mining precious resources or growing digital crops. It’s an approach also known as play-to-earn.
A non-fungible token is a line of code on the blockchain that confirms unique ownership of a piece of digital art or collectible such as a video clip, a meme or an item used in an online game. Some NFTs fetch millions of dollars. Notable collections include Bored Ape Yacht Club, CryptoPunks and NBA Top Shot. Brands have started offering them as prizes or loyalty rewards. Even Ukraine has been selling NFTs to help fund the reconstruction of cultural institutions destroyed since Russia’s invasion in February.
A term used for coins that should be avoided as they have little value or useful purpose. To make things more confusing, there’s an actual cryptocurrency called Shitcoin.
A process in which holders of a cryptocurrency allow their tokens to be used to help order transactions on that coin’s blockchain. Staking has been booming in part because of the incentive-based aspect of crypto, where various new coins and blockchains are competing for so-called validators, sometimes by promising potentially stratospheric annual returns in the form of new coins. Staking is viewed as a relatively lower-risk way to earn yield through DeFi.
Total value locked. In many DeFi applications, users deposit their coins to earn yields — for lending their coins out, for example. The total of those deposits into an app is total value locked. Users often check how an app’s TVL changes over time, or compares to that of rival apps, to make decisions on where to deposit their digital coins.
If the crypto community has a political manifesto, this is it — a vision for a new World Wide Web built on blockchain applications that shifts power back to users from the tech companies that built vast empires by sucking up our data and selling it to advertisers.
Farmers plant crops to make money. Risk-taking crypto investors put their coins into yield-harvesting schemes to earn returns. A typical strategy involves lending a token, borrowing another, and earning yet another token. At one point, investors were earning triple-digit returns from such complex combinations.
A lot of the terminology found on crypto forums reflects the hopes and anxieties of people who’ve placed large bets on various tokens and blockchain projects. Here’s a selection:
When Lambo? — An aspirational reference to Italian sports cars that endures from the early days of Bitcoin mania.
LFG — “Let’s go!” (with an expletive added in the middle). A common crypto rallying cry. Not coincidentally, these are also the initials of the Luna Foundation Guard, a group of investors that back the controversial stablecoin TerraUSD.
HFSP — “Have fun staying poor.” A taunt to those don’t entirely agree that the digital coin you’re backing will go “to the moon.”
DYOR — “Do your own research.” What you might say to the ninth person today who asks you to explain a new digital asset before they invest.
WAGMI — “We’re all gonna make it.” It’s a phrase crypto fans use to show their support for one another or inspire confidence in a project. You can probably guess what NGMI stands for.
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